UK household incomes are in the longest-ever run of decline


Adjusted for inflation, disposable incomes dropped 0.2% in the first three months of the year, the Office for National Statistics (ONS) said.

LONDON: Britain’s household incomes are on their longest downward trend on record, as the nation’s cost of living crisis saps the spending power of British households.

Adjusted for inflation, disposable incomes dropped 0.2% in the first three months of the year, the Office for National Statistics (ONS) said.

That’s the fourth straight quarter of decline – the longest run since records began in 1955.

The figures are all the more worrying as they come before April’s tax and energy bill increases kick in, dramatically worsening families’ financial situation.

With inflation forecast to hit double digits later this year, and wages failing to keep up, the prospects for households look increasingly bleak.

In total, incomes are 1.3% lower than a year earlier, the ONS said. The saving ratio, the proportion of income left unspent, was unchanged at 6.8%.

The fall in incomes highlights the strain on consumers struggling to keep up with soaring prices of everything from energy and food to motor fuel and clothing.

That’s pushed inflation to a four-decade high, and Prime Minister Boris Johnson is under mounting pressure to do more to help amid warnings that the economy is sliding into recession.

Gross domestic product (GDP) grew 0.8% in the first quarter, the ONS confirmed. It left output 0.7% above pre-pandemic levels, a better performance than other G7 nations bar the United States and Canada.

However, output has been on a weakening path since January, and the Bank of England now expects a contraction in the second quarter as consumers tighten their belts.

How well the economy holds up will depend on the willingness of people to spend more of their income and draw down an estimated £200bil (RM1.07 trillion) of excess savings built up during the pandemic, when lockdowns restricted opportunities to spend.

If growth is expected to be patchy this year, the outlook for 2023 is for near stagnation, with the The Organisation for Economic Cooperation and Development predicting the UK will perform worse than every Group of 20 economy except sanctions-hit Russia.

Separate figures showed the current-account deficit, the gap between money coming into the UK and money leaving, widened sharply to £51.7bil (RM277bil) in the first quarter. That equated to 8.3% of GDP.

The shift reflected a dramatic widening in the trade shortfall and a £17bil (RM91bil) swing from surplus to deficit in the balance on investment income. — Bloomberg

Article type: free
User access status:
Subscribe now to our Premium Plan for an ad-free and unlimited reading experience!

UK , economy , inflation , income , Bank of England ,

   

Next In Business News

Touch 'n Go launches digital investment platform
KPJ Healthcare appoints Nik Fawaz Nik Abdul Aziz as chief commercial officer
Malaysia's Treasure Global closes Nasdaq IPO
Ringgit opens lower against US$ as weak China economic data continues to weigh
Bursa's VCM exchange puts a price on carbon emissions
Investors look forward to positive earnings reports
Shifting priorities for property
Driving value through governance
Trading ideas: Datasonic, Protasco, Top Glove, Tiong Nam Logistics, Kelington, BP Plastics, Malaysian Bulk Carriers, Ivory Properties and KNM
ESG practices key to investments

Others Also Read